Mass. tally finds thin return from film subsidies

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The state’s film subsidy program cost taxpayers an estimated $44 million in tax credits in 2011, though it created the equivalent of more than 1,200 full-time jobs, according to the state’s latest annual report on the incentives.

In the report, the state Department of Revenue said most of the economic benefits went to Hollywood and other locales. Only 35 percent of the $176 million that production companies spent in Massachusetts in 2011 went to residents and companies in the state. The state recouped just 16 cents in new tax revenue for every $1 it gave up in subsidies in 2011, the most recent year with complete data.

The subsidies created the equivalent of less than 500 net new full-time jobs for Bay State residents in 2011. The Revenue Department calculated the program has cost an average of more than $128,000 for every local full-time job it created since its inception 2006 — nearly double what the jobs paid the workers in wages during that span.

“If you are seeing a cost per job that is greater than the salary of those jobs, that suggests there is a pretty serious problem with the tax break,” said Noah Berger, president of the Massachusetts Budget and Policy Center, a watchdog group.

The film subsidy program offers tax credits that reimburse production companies for up to 25 percent of the cost of filming in Massachusetts. It has become controversial over the years as supporters and opponents debate whether the economic benefits are worth the cost.

Created to attract film productions to the state, the subsidy program has done just that.
The Department of Revenue estimated that the industry made 77 productions in Massachusetts in 2011. There were 13 feature films, 12 television series, 47 commercials, and five documentaries.

Last year’s figures are incomplete, but the Revenue Department estimated there were 61 projects in the works that were likely to generate $313 million in spending, and cost the state $78.2 million in lost tax revenue, substantially more than the 2011 tally.

Film industry advocates say the revenue agency’s analysis fails to take into account the full economic activity created by the local productions, including the potential boost to tourism by showcasing the state.

Movie companies also insist that the productions have created thousands of part-time jobs in the state and helped countless businesses, such as restaurants and hotels.

“The incentive is working,” said Chris O’Donnell, business manager for the International Alliance of Theatrical Stage Employees, Local 481, in Woburn. It has 900 members who typically work behind the scenes on productions, triple what it had before the incentives were put in place.

Roughly 40 states offer some type of incentive program for the film industry. As in Massachusetts, the incentives have been controversial elsewhere. Many economists and watchdog groups have long argued that the incentives are too expensive and do not pay for themselves.

Lisa Strout, director of the Massachusetts Film Office, said there are several projects underway in Massachusetts, including two that moved here after Pennsylvania capped its film subsidies.

Governor Deval Patrick recently proposed capping Massachusetts’ subsidies at $40 million a year, and state Representative Tackey Chan, Democrat of Quincy, recently proposed slashing the size of the tax credit by 40 percent for companies that do not spend at least half of their payroll on Massachusetts residents.

Both proposals are likely to face opposition in the Legislature.

Separately, the Massachusetts Production Coalition, which represents the movie industry, plans to hold an expo to promote the state’s film industry at WGBH (itself a major recipient of the state subsidies) in Boston on Saturday. More than 50 exhibitors are expected to ­attend.